Muzak disclosure statement approved; confirmation hearing Jan. 12

By Caroline Salls

Pittsburgh, Nov. 2 - Muzak Holdings, LLC received court approval of the disclosure statement for its amended plan of reorganization, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan confirmation hearing is scheduled for Jan. 12.

Treatment of creditors will include:

• Holders of secured term loan claims will receive payment in full in cash from the proceeds of an exit facility;

• Holders of the $220 million 10% senior unsecured notes will receive $135 million in new senior unsecured notes with 8% cash and 7% PIK coupons, as well as $85 million of payment-in-kind preferred stock;

• Holders of the $115 million 9 7/8% senior subordinated unsecured notes will receive 100% of the new common stock of reorganized Muzak;

• Holders of the $24 million 13% senior discount unsecured notes will receive five-year warrants for 7.5% of the fully diluted new common stock at market value based on an enterprise value to be determined;

• Holders of general unsecured claims and priority claims will recover 100% in cash;

• Existing equity interests will be cancelled and holders will receive no distribution; and

• Intercompany interests will be retained.

Muzak, a Fort Mill, S.C.-based recorded music company, filed for bankruptcy on Feb. 10, 2009. Its Chapter 11 case number is 09-10422.

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